Why I Never Use Net Income

“I think that every time you see the term EBITDA, you should substitute the word ‘bullshit earnings’.” Charlie Munger on Net Income – AKA EBITDA

In my network of friends / family / colleagues, I’m most often known as ‘The Investment Guy’.

Because of this, I’m often asked about the latest trend in investing, whether it be years ago, gold and silver, the Greek Crash a couple years ago, or more recently, weed stocks and cryptocurrency.

To see our other videos in this series, where I give my thoughts on weed stocks, crypto, diversification, retirement plans and more, click here.

Today, I tell you why I NEVER use net income – AKA EBITDA, AKA earnings.

Let’s get to it…

In the 16-minute video above, I tell you why I never use net income.

Here are some of the things I talked about in the video above:

• Why net income sucks
• Why I and many other investors consider net income as ‘bullshit earnings’
• Why it’s easy to manipulate. Meaning companies can make this number anything they want, meaning it’s not reliable
• Why I’d rather know the operating profits of a company
• Or its free cash flow production
• Or its owner’s earnings instead of net income
• And more…

Do you use net income? Did I miss something? Let me know in the comments below.

Click the link below to check out my article that further explains some of these concepts Why The P/E Is Useless And How To Calculate EV below.

Here’s an updated talk on this from our Value Investing In Your Car series.

P.S. Go here to get a free paperback copy of my book On Float to gain a massive advantage over other investors. You pay for the shipping then I pay for the cost of the book and I’ll ship it to you anywhere in the world.

P.P.S. If you want to become a better value investor fast, make sure to check out our Value Investing Journey Masterclass. There are ONLY 7 spots left for our special offer that you will only hear about if you set up a call with me by using the prior link as well. The special offer, available to only 7 more people, is 5 FREE one on one training sessions with me.